WAL-MART STORES INC. AND ANOTHER v. WAL-MART PRODUCTION LTD AND ANOTHER

HCA1285/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1285 OF 2008

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(Heard Together)

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J U D G M E N T

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1. At the commencement of these applications, it was agreed that the applications in both actions should be heard together at the same time and that the two applications in each action should also be heard together.  Both these actions are passing-off actions.  The 2nd Defendant is the sole director of the 1st Defendant.

2. In both actions, the statement of claims were issued on 15 July this year.  The deadline for filing defences was 11 September.  On 13 August, the Plaintiff formally put the Defendants on notice that they required strict compliance with time limits.  The Defendants filed a lengthy request for further and better particulars on 1 September.  The Plaintiffs filed answers to these requests on 12 September.  At a hearing before Master J Wong on 17 September it was ordered that the Defendants must file their defences by 18 September.

3. It is now accepted by the parties that Defendants did not comply with this order.  They sent a fax of the defences late on 18 September to the Plaintiff’s solicitors and this, of course, does not constitute compliance with Master J Wong’s order.

4. The applications lying before me are an application by the Defendants for “the service and filing of the defence on 19 September be deemed good” and applications by the Plaintiffs for default judgment.  This was based upon the failure of the Defendants to file defences within time and the failure of the defences to demonstrate any arguable defence. 

5. Dealing with the Defendants’ applications first, I accept the validity of the contention advanced by Mr Hughes, representing the Plaintiffs, that the Defendants at no time have requested an extension of time.  What the Defendants appear, on their face, to be seeking is an order that in all of the circumstances of the case the defences filed on 19 September should be deemed to constitute good service.  In my view, this is not just a matter of semantics.  As drafted, the summonses do not admit that there has been non-compliance with a court order and no attempt is made to crave the indulgence of the court.  An order extending a time limit is a discretionary order and unless there is suitable evidence supporting  the request for an indulgence there is nothing before the judge to support the granting of the relief sought.

6. There was correspondence between the parties when the defendants proposed that the problems which had arisen could be resolved by the parties agreeing a consent order and being compensated in costs.  I consider that the Plaintiffs were fully justified in not agreeing this proposed solution and deciding to proceed with their applications for judgment.  However, notwithstanding all of this, in my view, by far the most important aspect of these two applications is the question whether the defendants have demonstrated that they have an arguable defence.

7. Mr Hughes helpfully took me through all of the necessary ingredients of the matters which have to be proved by the Plaintiffs in order for them to succeed and referred me to the defences filed by the Defendants.  He submitted that it was manifest that the defences filed had no prospect whatever of success and that, this being the case, his application for judgment should be allowed and the Defendants’ application should be dismissed.

8. Mr Wong for the Defendants argued that there was a valid defence to the claims being made by the Plaintiffs and that the Plaintiffs would suffer no prejudice if the time for filing a defence was extended to enable the cases to proceed.  Mr Wong argued that it was incumbent upon the Plaintiffs to establish goodwill in Hong Kong and that they had only been in business in Hong Kong since 1996.  His clients had been in business prior to this and according the Plaintiffs’ cases were fatally flawed.

9. This contention is not well-founded.  There are a number of cases where it was held that there is no requirement for a Plaintiff to prove that it is carrying on business in Hong Kong for the passing-off claim to be based upon an international reputation (see Kabushiki Kaisha Yakuet Honsha v Yakudo Group Holdings Ltd [2004] 1HKC 630 and Tan-ichi Company Limited v Jancar Limited [1990] FSR 151 and Hong Kong Caterers Limited v Maxims Limited [1983] HKLR 287 and Wienerwald Holdings AG v Kwan Wong Tan & Fong [1979] FSR 381.)

10. Mr Wong did not argue that any of the other numerous matters referred to in the lengthy defence constituted a defence to these claims.  

11. I am satisfied that the Defendants have failed to demonstrate that they have an arguable defence to the claims made by the Plaintiffs.  I am also satisfied that in all of the circumstances which were before me that I should not accede to the application made by the Defendants that the defences filed on 19 September should be deemed to be properly served and filed.

12. I make orders in the form sought by the Plaintiffs and I dismiss the Defendants applications.

Costs

13. Mr Wong was critical of the conduct of the Plaintiffs in preparing so many documents in support of their application.  I do not consider that this criticism is well founded.  The very fact that the Defendants would, no doubt, seek to maintain that they had an arguable defence would fully justify the preparations made by the Plaintiffs.  I order that the Plaintiffs will have their costs on both summonses.